Montana Public Service Commission holds public hearing on proposed $900 million dam purchase

Montana regulators are beginning a public hearing Tuesday to help determine whether NorthWestern Energy's $900 million plan to purchase 11 hydroelectric dams from PPL Montana is in the public interest.

With thousands of documents and public input from 17 meetings, the Public Service Commission has scheduled two weeks for the hearing at the state Capitol. The PSC must give its approval for the sale to move forward.

"It's the case of the millennium for us," PSC Chairman Bill Gallagher said. "The key question we have to answer is do the benefits outweigh the risks."

NorthWestern, the largest electric and natural gas utility in the state, announced the deal with the dams' current owner PPL Montana last year, saying the dams will provide an affordable, long-term electricity supply for customers.

"We want to diversify our sources of electricity and think there's benefit to owning," NorthWestern spokesman Butch Larcombe said of the dams.

The purchase would benefit customers because energy prices would be based on the cost of production and not on varying prices NorthWestern pays for power on the open market, he said.

If the sale goes through, NorthWestern's 342,000 electricity customers will see an immediate rate increase of 5 to 7 percent, Larcombe said. That would add $4 to $6 to an average customer's electric bill each month.

The Montana Consumer Counsel, which represents the interests of utility consumers, has raised concerns that the price NorthWestern is paying for the dams is too high. The counsel also wants shareholders, not ratepayers, to be financially responsible if the company didn't budget enough for operations and maintenance.

"If those pretty large assumptions don't turn out to be correct, the benefits that are assumed pretty quickly disappear," said Bob Nelson with the consumer counsel.

A consulting company the Public Service Commission hired to evaluate NorthWestern's plan also questioned whether enough money is budgeted for dam operations and maintenance. NorthWestern officials have said the concerns are unfounded.

PPL has spent $350 million on maintenance since it purchased the dams and NorthWestern doesn't think they are in poor condition, Larcombe said.

The dams are on the Missouri, Madison, Flathead and Clark Fork rivers, and West Rosebud Creek and were built from the 1940s to the 1960s. They were owned by the Montana Power Co. until PPL bought them during deregulation in the late 1990s and early 2000s. Combined, the 11 dams have capacity to generate 633 megawatts of electricity, or as much as a large coal-fired power plant.

The proposed purchase is backed by Gov. Steve Bullock and has received unanimous endorsement from the legislative Energy and Telecommunications Interim Committee, which has jurisdiction over the PSC. The PSC will be taking those opinions into consideration as well as those from the public and evidence already under review, Gallagher said.

The Federal Trade Commission has ruled the purchase does not violate antitrust laws.

Public comment will also be taken during the hearing, and people can still comment online, by mail or email.